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principles upon which the actual proceeds of the business shall be divided, 
when they are realised; or whether some one person takes, on his own behalf or 
on behalf of a group of others, the risks, and discounts the estimated significance 
of the several factors, buying up their several interests in the product, in the 
form of wages and salaries, interest, rent, payment for machinery and raw 
material, and so forth; or whatever other mechanism may be adopted, the under- 
lying principle is the same. The differential equivalence of the factors of 
production reduces them to a common measure, and when they are all expressed 
in the same unit the problem of the division of the product amongst them is 
solved in principle. 
The exposition I have now given of the underlying principle of what are 
usually called ‘marginal, but what I should prefer to call ‘differential ’ 
economics, has been planned not with a view to meeting objections (except 
incidentally), but with a view to leading up to the changes it involves in our 
conception of the scope and the method of economic study. And, as almost 
all that I want to say is already implied or held in solution in this exposition, 
I hope that you will not grudge the time spent upon it. 
In a word, then, the differential method in economics must, I conceive, 
tend to enlarge and to harmonise our conception of the scope of the study, and 
to keep it in constant touch with the wider ethical, social, and sociological 
problems and aspirations from which it must always draw its inspiration and 
derive its interest. And at the same time it must indefinitely simplify its 
narrower and more technical branches, and must purge them of all kinds of 
distinctions and discussions which, whatever practical or technological value 
some of them may have, can only confuse a theoretical economic inquiry. 
{ will begin by considering the expansion of scope and the knitting up of 
economics with all the vital sciences. If we really understand and accept the 
principle of differential significances we shall realise, as already pointed out, 
that Aristotle’s system of ethics and our reconstructed system of economics are 
twin applications of one identical principle or law, and that our conduct in 
business is but a phase or part of our conduct in life, both being determined 
by our sense, such as it is, of differential significances and their changing 
weights as the integrals of which they are the differences expand or contract. 
Cesar, ‘that day he overcame the Nervii,’ being surprised by the enemy, 
contracted his exhortation to the troops, but did not omit it. In his distribu- 
tion of the time at his disposal the ditferential significance of prompt movement 
was higher than usual in relation to the differential significance of stirring words 
from their beloved and trusted commander addressed to the soldiers as they 
entered upon action. An ardent lover may decline a business interview in 
order to keep an appointment with his lady-love, but there will be a point at 
which its estimated bearing upon his prospects of an early settlement will make 
him break his appointment with the lady in favour of the business interview. 
A man of leisure with a taste for literature and a taste for gardening will have 
to apportion time, money, and attention between them, and consciously or 
unconsciously will balance the differential significances involved against each 
other. All these, therefore, are making selections and choosing between 
alternatives on precisely the same principle and under precisely the same law 
as those which dominate the transactions of the housewife in the market, or the 
management of a great factory or ironworks, or the business of a bill-broker. 
A full realisation of this will produce two effects. In the first place it will 
put an end to all attempts to find ‘laws’ proper to our conduct in economic 
relations. ‘There are none. Hitherto economists for the most part have been 
vaguely conscious that the ultimate laws of economic conduct must be psycho- 
logical, and, feeling the necessity of determining some defining boundaries of 
their study, have sought to make a selection of the motives and aims that are to 
be recognised by it. Hence the simplified psychology of the ‘economic man’ 
now generally abandoned—but abandoned grudgingly, by piecemeal, under 
pressure, and with constant attempts to patch up what ought to be cast away. 
There is no occasion to define the economic motive, or the psychology of the 
economic man, for economics study a type of relation, not a type of motive, and 
the psychological law that dominates economics dominates life. We may either 
ignore all motives or admit all to our consideration, as occasion demands, but 
there is no rhyme or reason in selecting certain motives that shall and certain 
others that shall not be recognised by the economist. 
